Gold bears defy rally as Goldman closes short wager

A surge in demand in Turkey is causing delays in coin deliveries by the Istanbul-based mint, Chief Executive Officer Sadettin Parmaksiz told Haberturk newspaper on April 19. The Perth mint has seen an “enormous number of people” buying gold, with interest from India, Thailand and China, Treasurer Nigel Moffatt said on Bloomberg Television April 19. Jewelers in India are paying premiums of as much as $10 an ounce, from $2 just 10 days earlier, according to the Bombay Bullion Association.

Demand has also come from central banks, owners of about 19% of all the metal ever mined. Russia and Kazakhstan boosted official reserves for a sixth month, International Monetary Fund data show. Central banks will buy as much as 550 tons this year after boosting holdings by 534.6 tons last year, the most since 1964, the World Gold Council estimates.

Gold ETPs

Goldman exited its bet on lower prices last week after issuing a sell recommendation April 10. The bank said gold’s decline has been “surprisingly rapid.” Prices may still continue to fall as investors’ conviction in holding the metal wanes, analysts including Samantha Dart and Jeffrey Currie said in the April 23 report.

Holdings in global ETPs slumped 13% to 2,283.57 tons this year, the lowest since October 2011. Hedge funds expanded short wagers 17% to more than quadruple the average since 2006, when the CFTC data begins.

Prices fell this month as equity markets rallied on improving global growth and weakening expectations for inflation. The Standard & Poor’s 500 Index of equities has more than doubled from its 12-year low in 2009, reaching an all-time high on April 11. Inflation expectations as measured by the break-even rate for five-year Treasury Inflation Protected Securities on April 18 reached the lowest since November.